Levitt Case Study
Harvard Business Review
July-August 1960
• Shortsighted managements often fail to recognize that in fact there is no such thing as a growth industry.
MARKETING MYOPIA
By Theodore Levitt Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very mueh in the shadow of decline. Others whieh are thought of as seasoned growth industries have actually stopped growing. In every case the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management. business. The reason they defined their industry wrong was because they were railroad-oriented instead of transportation-oriented; they were produetoriented instead of customer-oriented. e Hollywood barely escaped being totally ravished by television. Actually, all the established film companies went through drastic reorganizations. Some simply disappeared. All of them got into trouble not because of TV's inroads hut because of their own myopia. As with the railroads, Hollywood defined its husiness incorrectly. It thought it was in the movie husiness when it was actually in the entertainment husiness. "Movies" implied a specific, limited produet. This produced a fatuous contentment which from the beginning led producers to view TV as a threat. HollywootI scorncxi and rejected TV when it should have welcomed it as an opportunity — an opportunity to expand the entertainment husiness. Today TV is a bigger husiness than the old narrowly defined movie business ever was. Had HolKvvood heen eustomer-oriented (providing entertainment), rather than product-oriented (making movies), would it have gone through the fiscal purgatory that it did? I douht it. What ultimately saved Hollywood and accounted for its reeent resurgence was the vva\e of new young writers, producers, and directors whose previous suecesscs in television
45
Fateful Purposes
The failure is at the top. The exeeutives responsible for it,
July-August 1960
• Shortsighted managements often fail to recognize that in fact there is no such thing as a growth industry.
MARKETING MYOPIA
By Theodore Levitt Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very mueh in the shadow of decline. Others whieh are thought of as seasoned growth industries have actually stopped growing. In every case the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management. business. The reason they defined their industry wrong was because they were railroad-oriented instead of transportation-oriented; they were produetoriented instead of customer-oriented. e Hollywood barely escaped being totally ravished by television. Actually, all the established film companies went through drastic reorganizations. Some simply disappeared. All of them got into trouble not because of TV's inroads hut because of their own myopia. As with the railroads, Hollywood defined its husiness incorrectly. It thought it was in the movie husiness when it was actually in the entertainment husiness. "Movies" implied a specific, limited produet. This produced a fatuous contentment which from the beginning led producers to view TV as a threat. HollywootI scorncxi and rejected TV when it should have welcomed it as an opportunity — an opportunity to expand the entertainment husiness. Today TV is a bigger husiness than the old narrowly defined movie business ever was. Had HolKvvood heen eustomer-oriented (providing entertainment), rather than product-oriented (making movies), would it have gone through the fiscal purgatory that it did? I douht it. What ultimately saved Hollywood and accounted for its reeent resurgence was the vva\e of new young writers, producers, and directors whose previous suecesscs in television
45
Fateful Purposes
The failure is at the top. The exeeutives responsible for it,